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PharmaSphere: Emerging Biotech Investment Report - Strategic Trends in Private Equity and Venture Capital Funding

Summary

GlobalData’s "PharmaSphere: Emerging Biotech Investment Report - Strategic Trends in Private Equity and Venture Capital Funding" report provides in-depth analysis of the current trends and factors shaping the private equity and venture capital segments of the financial industry, bearing in mind that these are expected to have significant impact on the future of emerging biotechnology companies in the US and globally. Furthermore, the report identifies regions of the world that are attracting more investments in healthcare and discusses the various factors responsible for this trend. In addition, the report provides detailed profiles of 12 leading private equity firms, 15 top venture capital firms, and 15 US-based emerging biotechnology companies that completed initial public offerings in 2013.

Throughout the report, GlobalData’s analysts provide you with expert insight, expanding on each observation, strategy, and trend discussed, with the aim of providing you with the tools needed for making informed business decisions in the rapidly changing global investment landscape.

Highlights

Key Questions Answered

- What are the current trends impacting emerging biotechnology investment in the US and globally?
- What regions are witnessing noteworthy investment in healthcare and what are the factors driving such occurrences?
- What therapeutic areas are attracting the most investment by private equity and venture capital firms and why?
- What has been the trend of equity offerings in the healthcare sector since 2004 and what factors were responsible?
- What is the strategic outlook of emerging biotechnology investment?

About the Report

This report is an essential source of information and analysis on emerging biotech investment, with significant emphasis on the US. GlobalData provides an in-depth analysis of the current trends and factors shaping the private equity and venture capital segments of the financial industry. The report highlights the various therapeutic areas attracting noteworthy funding in terms of the volume and value of new and follow-on investments and discusses the factors responsible for this trend. Furthermore, it provides a strategic outlook on future trends that are expected in private equity and venture capital funding and how they will impact the growth and development of biotech companies globally.

Scope

- Historical trend analysis of private equity and venture capital funding prior to- and after the financial market crash of 2008, including a change in the average value of completed deals in the healthcare industry
- The report highlights how ongoing healthcare reform in parts of Europe and North America are resulting in a shift of deals activity involving private equity and venture capital firms to the Asia-Pacific
- Discussion of therapeutic areas attracting significant investments, as well as the factors responsible for such trends
- Detailed profiles of 12 leading private equity firms, 15 top venture capital firms, and 15 US-based emerging biotechnology companies that completed initial public offerings in 2013
- Global strategic outlook on future trends that are expected in private equity and venture capital funding, as well as the need for a new financing model to drive the sustainable growth of emerging biotech companies.

Reasons to buy

- Understand the current trends impacting emerging biotechnology investment in the US and globally
- Evaluate the strategies being used by leading private equity and venture capital firms as they aim to minimize risk and ensure significant return on investment
- Gain valuable insights into the investment strategies, deals, and portfolios of leading private equity and venture capital firms
- Gain valuable insights into US-based, innovative emerging biotechnology companies with venture capital backing, their developmental pipelines, and strategic collaborations
- Use this information as an independent source for your due diligence and transaction strategy

Table Of Contents

PharmaSphere: Emerging Biotech Investment Report - Strategic Trends in Private Equity and Venture Capital Funding
1 Table of Contents

2 Introduction 18
2.1 Report Scope 18
2.2 Upcoming Related Reports 19
2.3 Recently Published Reports 19
3 US Private Equity and Venture Capital Industry Dynamics 21
3.1 Post-2008 Financial Market Crash: Volume of Capital Commitments to Private Equity Funds Show Signs of Recovery 21
3.1.1 Venture Capital Fundraising Trend in the US 22
3.2 Volume over Value: Decrease in the Average Value of Completed Private Equity Healthcare Deals between 2007 and 2013 24
3.3 Healthcare Reform and Cost Pressures in Europe and North America Shifts Deal Activity to the Asia-Pacific Region 25
3.4 Private Equity Deals by Therapy Area 28
3.4.1 Central Nervous System, Immunology, Infectious Disease, Metabolic Disorders, and Oncology Enjoying Significant Investment 28
3.5 Private Equity Buyouts of 2013 30
3.6 Venture Capital Investment Trend 31
3.7 Venture Capital Investment: Biotechnology Plays Second Fiddle to Software 34
3.8 Seed-Stage Financing Shows Downward Trend 37
3.9 Venture-Backed Exits in 2013 38
3.9.1 Significant Venture-Backed Biotechnology Acquisitions in 2013 40
3.9.2 Venture-Backed Mergers and Acquisition Witness Strong End to 2013 40
3.10 California, Massachusetts, and New York Lead the Pack in Venture Capital Investment for 2013 42
4 Equity Offerings 44
4.1 Equity Offerings in the Healthcare Sector 44
4.2 Venture-Backed Initial Public Offerings in 2013 45
4.3 Venture-Backed Emerging Biotech Initial Public Offerings in 2013 46
4.4 Liquidity Position Makes Emerging Biotechs an Attractive Prospect for Investors 47
4.5 Company Profiles and Initial Public Offer Details 49
4.5.1 Intrexon Corporation (Stock Symbol: XON) 49
4.5.2 Ophthotech Corporation (Stock Symbol: OPHT) 51
4.5.3 PTC Therapeutics (Stock Symbol: PTCT) 52
4.5.4 Portola Pharmaceuticals (Stock Symbol: PTLA) 54
4.5.5 Agios Pharmaceuticals (Stock Symbol: AGIO) 55
4.5.6 Chimerix (Stock Symbol: CMRX) 57
4.5.7 Bluebird Bio (Stock Symbol: BLUE) 58
4.5.8 Foundation Medicine (Stock Symbol: FMI) 59
4.5.9 OncoMed Pharmaceuticals (Stock Symbol: OMED) 60
4.5.10 Acceleron Pharma (Stock Symbol: XLRN) 62
4.5.11 Prosensa Therapeutics (Stock Symbol: RNA) 64
4.5.12 Epizyme (Stock Symbol: EPZM) 65
4.5.13 Onconova Therapeutics (Stock Symbol: ONTX) 66
4.5.14 Tetraphase Pharmaceuticals (Stock Symbol: TTPH) 68
4.5.15 Esperion Therapeutics (Stock Symbol: ESPR) 69
5 Private Equity Firms: Company Drill-Downs 71
5.1 Section Overview 71
5.2 TPG Capital 72
5.2.1 Overview and Portfolio Management 72
5.2.2 Historical Deals Trend 74
5.2.3 Healthcare-Related Deals in 2013 76
5.3 The Carlyle Group 76
5.3.1 Overview and Portfolio Management 76
5.3.2 Historical Deals Trend 78
5.3.3 Healthcare-Related Deals in 2013 79
5.4 The Blackstone Group 80
5.4.1 Overview and Portfolio Management 80
5.4.2 Historical Deals Trend 82
5.4.3 Healthcare-Related Deals in 2013 83
5.5 Kohlberg Kravis Roberts 83
5.5.1 Overview and Portfolio Management 83
5.5.2 Historical Deals Trend 86
5.5.3 Healthcare-Related Deals in 2013 88
5.6 Warburg Pincus 89
5.6.1 Overview and Portfolio Management 89
5.6.2 Historical Deals Trend 90
5.6.3 Healthcare-Related Deals in 2013 92
5.7 Goldman Sachs Principal Investment Area 93
5.7.1 Overview and Portfolio Management 93
5.7.2 Historical Deals Trend 93
5.8 Advent International Corporation 95
5.8.1 Overview and Portfolio Management 95
5.8.2 Historical Deals Trend 96
5.8.3 Healthcare-Related Deals in 2013 98
5.9 Apollo Global Management 99
5.9.1 Overview and Portfolio Management 99
5.9.2 Healthcare-Related Deals in 2013 99
5.10 Bain Capital 99
5.10.1 Overview and Portfolio Management 99
5.10.2 Historical Deals Trend 100
5.10.3 Healthcare-Related Deals in 2013 101
5.11 CVC Capital Partners 101
5.11.1 Overview and Portfolio Management 101
5.11.2 Historical Deals Trend 102
5.12 Oaktree Capital Management 103
5.12.1 Overview and Portfolio Management 103
5.12.2 Historical Deals Trend 104
5.13 Hellman and Friedman 105
5.13.1 Overview and Portfolio Management 105
5.13.2 Historical Deals Trend 106
6 Venture Capital Firms: Company Drill-Downs 108
6.1 Section Overview 108
6.2 New Enterprise Associates 109
6.2.1 Overview and Portfolio Management 109
6.2.2 Historical Deals Trend 112
6.2.3 Biotechnology Exits and Initial Public Offerings in 2013 114
6.3 OrbiMed Advisors 115
6.3.1 Overview and Portfolio Management 115
6.3.2 Historical Deals Trend 117
6.3.3 Biotechnology Exits and Initial Public Offerings in 2013 119
6.4 Canaan Partners 120
6.4.1 Overview and Portfolio Management 120
6.4.2 Historical Deals Trend 122
6.4.3 Biotechnology Exits and Initial Public Offerings in 2013 123
6.5 Versant Ventures 123
6.5.1 Overview and Portfolio Management 123
6.5.2 Historical Deals Trend 125
6.5.3 Biotechnology Exits and Initial Public Offerings in 2013 127
6.6 New Leaf Venture Partners 128
6.6.1 Overview and Portfolio Management 128
6.6.2 Historical Deals Trend 129
6.6.3 Biotechnology Exits and Initial Public Offerings in 2013 131
6.7 Third Rock Ventures 132
6.7.1 Overview and Portfolio Management 132
6.7.2 Historical Deals Trend 134
6.7.3 Biotechnology Exits and Initial Public Offerings in 2013 136
6.8 Domain Associates 137
6.8.1 Overview and Portfolio Management 137
6.8.2 Historical Deals Trend 139
6.8.3 Biotechnology Exits and Initial Public Offerings in 2013 141
6.9 Kleiner Perkins Caufield and Byers 142
6.9.1 Overview and Portfolio Management 142
6.9.2 Historical Deals Trend 144
6.9.3 Biotechnology Exits and Initial Public Offerings in 2013 146
6.10 Clarus Ventures 147
6.10.1 Overview and Portfolio Management 147
6.10.2 Historical Deals Trend 148
6.10.3 Biotechnology Exits and Initial Public Offerings in 2013 150
6.11 Flagship Ventures 151
6.11.1 Overview and Portfolio Management 151
6.11.2 Historical Deals Trend 153
6.11.3 Biotechnology Exits and Initial Public Offerings in 2013 155
6.12 Additional Venture Capital Firms with Significant Biotechnology Investments 156
6.12.1 Novo A/S 156
6.12.2 InterWest Partners 158
6.12.3 Essex Woodlands Health Ventures 160
6.12.4 Alta Partners 162
6.12.5 Third Security 164
7 Strategic Outlook 166
7.1 New Financing Models Needed for Sustainable Growth of Emerging Biotechs 166
7.2 Aggressive Growth Will Continue in the Asia-Pacific Region 167
7.3 Small and Midsize Funds Will Enjoy Significant Deal Activity 167
7.4 Initial Public Offering Activity Will Increase in 2014 168
7.5 Increased Pressure on Venture Capital Firms 168
8 Appendix 169
8.1 Bibliography 169
8.2 Abbreviations 174
8.3 Research Methodology 178
8.3.1 Coverage 178
8.3.2 Secondary Research 178
8.3.3 Expert Panel Validation 179
8.4 About the Authors 180
8.4.1 Analyst 180
8.4.2 Director of Healthcare Industry Dynamics 180
8.4.3 Global Head of Healthcare 181
8.5 About the Industry Dynamics Team 181
8.6 About GlobalData 182
8.7 Disclosure Information 182
8.8 Disclaimer 182

1.1 List of Tables

Table 1: Significant Healthcare Private Equity Deals in 2013 30
Table 2: Top Healthcare Venture Capital Deals in 2013 32
Table 3: Breakdown of Venture Capital Investment Dollars in the US by Industry, 2008-2013 ($m) 36
Table 4: Significant Emerging Biotech Initial Public Offerings in 2013 47
Table 5: Intrexon: Pipeline of Partnered Products 50
Table 6: Ophthotech: Product Pipeline 51
Table 7: PTC Therapeutics: Product Pipeline 53
Table 8: Portola Pharmaceuticals: Product Pipeline 54
Table 9: Agios Pharmaceuticals: Product Pipeline 56
Table 10: Chimerix: Product Pipeline 57
Table 11: Bluebird Bio: Product Pipeline 59
Table 12: OncoMed Pharmaceuticals: Product Pipeline 61
Table 13: Acceleron Pharma: Product Pipeline 63
Table 14: Prosensa Therapeutics: Product Pipeline 65
Table 15: Epizyme: Product Pipeline 66
Table 16: Onconova: Product Pipeline 67
Table 17: Tetraphase Pharmaceuticals: Product Pipeline 69
Table 18: Esperion Therapeutics: Product Pipeline 70
Table 19: TPG Biotech: Current Investment Portfolio 73
Table 20: The Carlyle Group: Healthcare Portfolio 77
Table 21: The Blackstone Group: Healthcare/Pharma Private Equity Portfolio 81
Table 22: Kohlberg Kravis Roberts' Healthcare-Focused Global Private Equity Portfolio* 85
Table 23: Warburg Pincus: Healthcare Portfolio 89
Table 24: Advent International: Current Healthcare Investments 96
Table 25: Bain Capital Private Equity: Healthcare Portfolio 100
Table 26: CVC Capital's Current Healthcare-Related Investments 102
Table 27: Breakdown of Oaktree Capital Management's Assets by Class and Client Type* 104
Table 28: Hellman and Friedman: Current Healthcare Investments 106
Table 29: New Enterprise Associates: Current Biopharma Portfolio 110
Table 30: OrbiMed Advisors: Current Biopharmaceuticals Portfolio 115
Table 31: Canaan Partners' Ventures: Current Biopharmaceuticals Portfolio 121
Table 32: Versant Ventures: Current Biotechnology Portfolio 124
Table 33: New Leaf Venture Partners: Current Biopharmaceuticals Portfolio 128
Table 34: Third Rock Ventures: Current Biopharmaceuticals Portfolio 133
Table 35: Domain Associates: Current Biopharmaceuticals Portfolio 137
Table 36: Kleiner Perkins Caufield and Byers: Current Therapeutics Portfolio 143
Table 37: Clarus Ventures: Current Biotechnology Portfolio 147
Table 38: Flagship Ventures: Current Therapeutics Portfolio 152

1.2 List of Figures
Figure 1: Capital Commitments to Private Equity Firms, 2007-2013* 22
Figure 2: Venture Capital Fundraising, 2009-2013 23
Figure 3: Global Healthcare Private Equity Deal Trend (Volume and Value), 2006-2013 25
Figure 4: Global Healthcare Private Equity Deal Volume by Region, 2006-2013 27
Figure 5: Global Healthcare Private Equity Deal Value* by Region, 2006-2013 28
Figure 6: Global Healthcare Private Equity Deals by Therapy Area, 2013* 29
Figure 7: US Venture Capital Investment, 2009-2013 33
Figure 8: Composition of Venture Capital Investments in the US, 2013 35
Figure 9: Value of Venture Capital Investment in the US by Companies' Stage of Development, 2013 37
Figure 10: Volume of Venture Capital Investment Deals in the US by Companies' Stage of Development, 2013 38
Figure 11: Venture-Backed Initial Public Offerings and Merger and Acquisition Exits,* 2008-2013 39
Figure 12: Venture-Backed Merger and Acquisition Exits* in the US, 2008-2013 41
Figure 13: Venture-Backed Merger and Acquisition Exits* in the US, Q1 2013-Q4 2013 42
Figure 14: Venture Capital Investments in the US by Region, Q1 2013-Q3 2013 43
Figure 15: Completed Equity Offerings,* 2004-2013 44
Figure 16: Completed Venture-Backed Initial Public Offerings in the US, 2013 45
Figure 17: Current Assets to Total Assets Ratios of 15 Emerging Biotech Companies* 48
Figure 18: TPG Capital: Deals Trend, 2005-2012* 75
Figure 19: TPG Capital: Deals by Therapy Area, 2005-2011 76
Figure 20: Carlyle Group: Deals Trend, 2005-2013* 78
Figure 21: Carlyle Group: Deals by Therapy Area, 2005-2011 79
Figure 22: The Blackstone Group: Deals Trend, 2005-2013 82
Figure 23: The Blackstone Group: Deals by Therapy Area, 2005-2011 83
Figure 24: Kohlberg Kravis Roberts: Deals Trend, 2006-2013 87
Figure 25: Kohlberg Kravis Roberts: Deals by Therapy Area, 2005-2011 88
Figure 26: Warburg Pincus: Deals Trend, 2005-2012 91
Figure 27: Warburg Pincus: Deals by Therapy Area, 2005-2011 92
Figure 28: Goldman Sachs Capital Partners: Deals Trend, 2005-2011* 94
Figure 29: Goldman Sachs Capital Partners: Deals by Therapy Area, 2005-2011 95
Figure 30: Advent International: Deals Trend, 2005-2013 97
Figure 31: Advent International: Deals by Therapy Area, 2005-2011 98
Figure 32: Bain Capital: Deals Trend, 2005-2013* 101
Figure 33: CVC Capital Partners: Deals Trend, 2005-2011* 103
Figure 34: Oaktree Capital Management: Deals Trend, 2005-2013* 105
Figure 35: Hellman and Friedman: Deals Trend, 2007-2011 107
Figure 36: New Enterprise Associates: Deals Trend, 2005-2013 113
Figure 37: New Enterprise Associates: Deals by Therapy Area, 2005-2011 114
Figure 38: OrbiMed Advisors: Deals Trend, 2005-2013 118
Figure 39: OrbiMed Advisors: Deals by Therapy Area, 2005-2011 119
Figure 40: Canaan Partners: Deals Trend, 2005-2013 122
Figure 41: Canaan Partners: Deals by Therapy Area, 2005-2011 123
Figure 42: Versant Ventures: Deals Trend, 2005-2013 126
Figure 43: Versant Ventures: Deals by Therapy Area, 2005-2011 127
Figure 44: New Leaf Venture Partners: Deals Trend, 2005-2013 130
Figure 45: New Leaf Venture Partners: Deals by Therapy Area, 2005-2011 131
Figure 46: Third Rock Ventures: Deals Trend, 2005-2013 135
Figure 47: Third Rock Ventures: Deals by Therapy Area, 2005-2011 136
Figure 48: Domain Associates: Deals Trend, 2005-2013 140
Figure 49: Domain Associates: Deals by Therapy Area, 2005-2011 141
Figure 50: Kleiner Perkins Caufield and Byers: Deals Trend, 2005-2013 145
Figure 51: Kleiner Perkins Caufield and Byers: Deals by Therapy Area, 2005-2011 146
Figure 52: Clarus Ventures: Deals Trend, 2005-2013 149
Figure 53: Clarus Ventures: Deals by Therapy Area, 2005-2011 150
Figure 54: Flagship Ventures: Deals Trend, 2005-2013 154
Figure 55: Flagship Ventures: Deals by Therapy Area, 2005-2011 155
Figure 56: Novo A/S: Deals Trend, 2005-2013 157
Figure 57: Novo A/S: Deals by Therapy Area, 2005-2011 158
Figure 58: InterWest Partners: Deals Trend, 2005-2013 159
Figure 59: InterWest Partners: Deals by Therapy Area, 2005-2011 160
Figure 60: Essex Woodlands Health Ventures: Deals Trend, 2005-2013 161
Figure 61: Essex Woodlands Health Ventures: Deals by Therapy Area, 2005-2011 162
Figure 62: Alta Partners: Deals Trend, 2005-2013 163
Figure 63: Alta Partners: Deals by Therapy Area, 2005-2011 164
Figure 64: Third Security: Deals Trend, 2005-2013 165
Figure 65: Typical Financing Pathway of an Emerging Biotech Company 166

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